Abercrombie & Fitch May Be Cool. But Cool Only Goes So Far.

By TRACIE ROZHON

Published: July 13, 2004

COLUMBUS, Ohio, July 7—
With sales slumping at the preppy retail stores he has run for more than a decade, Michael S. Jeffries, the chief executive of Abercrombie & Fitch, has plenty of critics these days.

Analysts say that his clothes are overpriced. Former employees claim that his company discriminates in hiring. West Virginia's governor is up in arms over a T-shirt that makes fun of his state. And that does not even count the many people long been outraged over Abercrombie's notoriously racy marketing catalog.

So what does Mr. Jeffries intend to do? Exactly the opposite of what his critics demand.

He is raising prices by introducing $148 jeans. He is fighting the lawsuit tooth and nail. He printed even more of the T-shirts. The new catalog is toned down, perhaps, but only because Mr. Jeffries says he is tired of the old one.

At 59, with bleached blond hair and a deep suntan, Mr. Jeffries is known for his contrarian streak and for an indefatigable work ethic. And even though Abercrombie, after a long period of success, now faces plenty of turbulence, Mr. Jeffries is still determined to run the company his way.

He constantly inspects his stores, making sure the stacks of colored polo shirts are aligned, the black-and-white posters (mostly of bare-chested young men) are in the right order, and that the store greeters, plucked out of Ivy League schools for their breeding and their good looks, are as perfect as they can be. ''O.K., I'm a control freak,'' Mr. Jeffries said with a laugh in an interview here on Wednesday.

Starting July 14, the new Abercrombie will be on display. To the untrained eye, it will probably look a lot like the old one. The company's new Ezra Fitch line will be introduced nationally. Jeans will sell for $118 to $148; a pink cashmere crew neck is $178.

Abercrombie is also reintroducing a slightly more pristine company magazine. And while the publication is cleaned up -- it no longer advocates group sex, for example -- Mr. Jeffries made it absolutely clear he is still determined to keep Abercrombie on the edge with both fashion and image.

''The people who are intimidated are not our customers,'' Mr. Jeffries said, wearing the company's summer ''uniform,'' a striped shirt hanging out over baggy khaki shorts and flip-flop sandals. ''We want college kids, the ones who aspire to be the coolest. We've been voted the third coolest brand, after Nike, and, I think, Sony.''

Being cool only goes so far, though. Mr. Jeffries freely concedes that it has been a rocky year for the $1.7 billion Abercrombie chain. While overall growth has continued because of expansions, the retailer's sales at stores open a least a year, the measure that many in the industry consider the most important gauge of performance, have been disappointing for many months.

Over all, same-store sales for June were off 5 percent from the month a year earlier. By comparison, the rival American Eagle Outfitters -- which has weathered one of the worst slumps in its history -- was up 8.7 percent for June. Aeropostale is up 21.3 percent and Express 12 percent.

Mr. Jeffries insisted that he was unconcerned about the weak sales numbers. He notes that sales at Abercrombie's 192 Hollister stores -- cheaper, and aimed at a teen audience with a mix of Ralph Lauren black shutters and Tommy Bahama palm trees -- were up 8 percent over last June.

The problem with the flagship Abercrombie chain, Mr. Jeffries said, is simply that it has followed ''the law of success.''

''When a company becomes a fad, it can't sustain itself as a fad forever,'' he continued. ''Abercrombie's has come off its fad peak, but we are maintaining and building and increasing the profitability of Abercrombie & Fitch.

''The important thing is that I didn't overreact,'' he said. ''When things start to go down, many retailers kill themselves; they throw out the baby with the bath water.''

Abercrombie's is a far different company from the store that was founded in 1892 by two college friends to sell safari gear to wealthy outdoorsmen like Theodore Roosevelt. It was still selling exquisite fly rods and quilted shooting jackets until the Limited bought it in 1988, for the rock-bottom price of $47 million.

Mr. Jeffries was installed as chief executive in 1992; he got rid of the reels and guns and lowered the target age of its customers to 18 to 22. The company went public in 1996 but the Limited held on to most of the stock until it spun off the remaining 84 percent two years later.

But for all the changes, some things are constant. The 359 Abercrombie stores maintain a masculine feel -- deliberately -- even though 60 percent of the shoppers are now women.

''Women like to shop in a masculine shop,'' explained David Leino, who supervises the stores, ''but, you know how it is, men don't like to shop in a feminine shop.''

For years, the stock sizzled, but even after things cooled off, Mr. Jeffries' compensation kept going strong. In 2003, he was paid more than $3.6 million in cash, perks and stock options.

Just a few weeks ago, he made the local Columbus newspaper when it was disclosed that he had cashed in options totaling $16.7 million over the last 16 months.